Shell Oil has agreed to sell its Martinez refinery to PBF Energy, a large independent refining company, for up to $1 billion, the two companies announced Tuesday.
The chief executive for New Jersey-based PBF called the Contra Costa County facility, which has refining capacity of 160,000 barrels a day, the best refinery in the Bay Area.
"The Martinez acquisition is too compelling for us to pass up," Tom Nimbley, the company's chairman and CEO, said during a conference call with analysts Tuesday afternoon. "We are buying a world-class asset at a fair price and an opportune time."
Shell executives say the sale is part of the company's effort to make significant changes in the oil industry. The oil giant, in a press release, said it wants to "reshape efforts toward a smaller, smarter refining portfolio."
"This deal is another step in our transformation," said Shell Downstream Director John Abbott.
Local workers employed at the Martinez site are expected to be offered jobs at PBF. Shell says it employs more than 700 people at the site.
"We look forward to welcoming Martinez's employees to the PBF family and continuing Shell's dedicated community partnerships," said Nimbley.
PBF operates several oil refineries and related facilities throughout the country, including one of its most recent purchases, a refinery in Torrance (Los Angeles County).
Both companies expect the sale of the refinery to close by the end of the year.
While the deal has been in the works for months, a PBF representative said he was unaware of which agencies would need to approve it.
"Now that we have announced the pending acquisition of the Martinez refinery from Shell, we will begin identifying which agencies have oversight responsibilities for the transaction," PBF spokesman Michael Karlovich said in an email.
In fact, the Federal Trade Commission and the California Attorney General's Office would be tasked with overseeing the purchase, according to Edward Ortiz, a spokesman for the California Energy Commission.
The Shell facility is one of the Bay Area's five oil refining facilities and two in the Martinez area.
The company says the refinery has been in operation since 1915 and has touted it as one of the most complex in the world. It converts crude into vehicle gasoline, jet fuel, diesel and asphalt, among other products.
In March local air regulators announced that Shell agreed to pay $165,000 to settle 16 air violations at the Martinez refinery that took place between late 2015 and 2016. That included several penalties associated with an outage in Dec. 19, 2016, which forced the refinery to flare off nearly 20 tons of gases and send flames and black smoke into the sky.
Like other Bay Area refineries, the facility has experienced a number of minor flaring incidents in recent years. According to the Bay Area Air Quality Management District, problems at the refinery led the Shell Martinez plant to send gases to its flares 73 times between 2005 and last year.
Last Friday the refinery experienced a pump fire in a process unit, prompting workers to evacuate that part of the facility.
Environmentalists have not been happy with the refinery for years, and the change in ownership will probably not change that perception.
"Good riddance to Shell," said Hollin Kretzmann, an Oakland-based attorney with the Center for Biological Diversity.
"But the new operator has a history of excessive flaring at its other California refinery, so communities near this dirty refinery aren't likely to see these problems go away," Kretzmann said.
Kretzmann pointed toward a series of violations PBF's Torrance refinery committed in recent years that led to investigations and fines by the South Coast Air Quality Management District.
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